Not that I have anything against political bloggers. I read them all the time. Many of the blogs on the sidebar are primarily political. It's just that everyone I've ever met who had any serious interest in or engagement with politics has turned out to have some kind of major emotional disturbance or another. While I'm sure no one would consider ascribing any such description to me, I'd hate to think I was involved in exacerbating it in my readers - two or three of whom still return, like crazed swallows, each week to this soiled and desecrated nest.

However, I read this statement, by one Matthew Yglesias - apparently this is some guy who likes to review essays without having read them; perhaps he has a background in academia or journalism - and it pissed me off:

Mass market comedy, as seen in Hollywood films, strikes me as a pretty good partner for post-Goldwater conservatism. Comedy, to be funny, usually requires the skewering of the powerful in some sense. But the mass culture marketing demands that your product not actually do much to challenge prevailing ideas in the world. It’s a bit of a paradoxical situation, but it nicely mirrors the efforts of a political ideology designed to further entrench the privileges of the country’s wealthy elite and its white Christian majority and somehow do so in the name of anti-elitism.

The legend that Yglesias repeats here might be called the Central Fiction of the Democrats. It is their Dolchstoss, their Donation of Constantine, their succession of Edward the Confessor. It bears no resemblance whatsoever to reality. However, once you believe it, you are ready to slurp down more juicy lies by the hundreds.

Actually, the CFD should probably be called the CFPD, because there is no Democratic Party in the United States and there hasn't been one for at least 75 years. In my opinion, history will probably prefer to refer to our present governing party as the Pseudo-Democrats. The last actual Democrat in presidential office in the United States was probably Grover Cleveland, although a minority of historians may prefer to designate James Buchanan or even Monroe. It's also worth noting that some Democratic qualities were demonstrated by the Republicans of the "return to normalcy" period, namely Harding and Coolidge.

I refer to the Democrats as our "governing party" because of the simple fact that most people who work in government are Democrats.

This is especially true when you consider all the unofficial arms of the government, that is, the extended civil service, all those who consider themselves to occupy a position of social or otherwise public responsibility. The most prestigious tentacles of the extended civil service are the press and the educational system, and it is arguable that, at least strictly in terms of internal security, these are the most powerful organs of the Polygon.

It is a commonly-held misconception that elected politicians hold any significant power in the current Western system of government. At best they represent figureheads around which power coalesces, and you can follow the power by following the name, as if it were a small and dusty bobber attached to a large and energetic fish. I think it's pretty clear that, in most if not actually all cases, there is an actual person who corresponds to the name, and this person has an actual brain and an actual personality and is not infected or otherwise controlled by any kind of evil alien parasite lifeform. From what I can gather, elected politicians are mostly very nice and thoughtful people, much more pleasant than most of us believe.

It is a mistake to believe, however, that any of them has any particular power. They are mostly intellectual captives of their various handlers, who are smarter than them and who specialize, like computer programmers, in making themselves permanently indispensable to their employers. Any statesman of the 19th century would have sneered at these pathetic puppets and their coteries of blowdried, backbiting, half-educated clowns.

However, there are about as many "Republican" politicians as "Democratic" ones. And at least the Republicans actually are Republicans, that is, Puritan fanatics attracted by the gigantic barbecue of Henry Clay's American System and its latest heir, the New Deal. They are just not quite as bad as the Democrats, except for on a few issues, where they make up for it by being much worse.

This is how the Polygon does its thing. It is balanced in an evil-genius sort of way. No one could possibly have invented such a heinous conspiracy - it's just what happened. It is an adaptive system, an evolutionary triumph of deception. Think of it as a little slug thing in your ear, like in "Star Trek II: The Wrath of Khan." And remember that as you attempt to extract it, the slug will emit an extremely loud screaming noise. There is no way to avoid this.

In any case, back to Yglesias. Who presumably thinks he is some kind of enlightened, independent, and moderate thinker, surveying the pinnacle of history from a comfortable hammock which appears, for some reason, to be positioned on its top. In fact, he is a tool of the security forces. And so is anyone employed as a public intellectual.

(Note that I am not an opponent of the security forces! In fact, as a quick look at my archive will demonstrate, gentlemen, I am among the most pro-security writers around, well past Tory and flirting boldly with the possibility of declaring myself a Cavalier. However, the color of UR is and always will be orange - the one revolution which ever was glorious. Any connection to Blogger's default template is purely coincidental.)

In the 21st century, any writer whose work appears anywhere but his own blog is a shill. Or at least, he should be assumed to be compromised unless proven otherwise. The Internet has all the tools you need to write and be read without being beholden to anyone. If anyone rejects this independence, you have to wonder why.

In the kingdom of the slug, people do not go around telling each other that they have - or even may have - a slug in their heads. Therefore, if writers have the option of complete freedom, they have no option but to accept it. The assumption must be that every intellectual institution which exists under the Polygon, which is legitimate in its eyes, is part of it.

For example, it makes about as much sense to get your climatology from Exxon as to get your political science from the State. In fact, probably more, because Exxon can probably find a way to make money going either way, whereas the State always wants you to cherish it more.

Of course, there is no actual slug in anyone's head. But there are a variety of ways the Polygon manages public opinion in order to achieve the same general result. Most of these techniques were described quite eloquently by Walter Lippmann in 1922, and I have no reason to bore you with their repetition. Certainly, if you have the universities, the schools and the press, you can pull off just about anything.

In any case: back to the Pseudo-Democrats and their shrieking monkey-lizard, Yglesias.

The Democrats turned into the Pseudo-Democrats when they were taken over by fanatical Republicans in a series of assaults by maniacal, birdbrained religious politicians, who realized that if they shifted their allegiance to this moribund party of a failed, defeated military force, they could take it over and create a new party which was actually even more zealous than the aging, mellowing Republicans - whose corrupt and bloody-handed rule, legitimized by terrorist mullahs like Henry Beecher, John Brown and Julia Ward Howe, had made such a sick mockery of the genteel Constitution their Federalist grandfathers designed.

A series of internal party coups were led by William Jennings Bryan, Woodrow Wilson, and Franklin Roosevelt. Bryan's captured the party but not Washington. Wilson's captured Washington but eventually was forced into a partial retreat. FDR's captured the US government, thanks largely to a deceptive presidential campaign in which he ran as an actual Democrat, has never given it up, and never intends to give it up.

Historians have christened this fanatical coup with a pleasant name. They call it the Progressive Movement. This may be a good indication of how much you can trust 20th-century historians, who have tended to be, rather unsurprisingly, progressives.

The general MO of the Progressive movement in attaining power was to cause problems, then appoint themselves to fix them. There is no better example than the Great Depression, which a few economists are starting to admit was the result of the bubble created by Progressive cheap-money policies under the early Federal Reserve.

The only reason we don't think of the Progressives' descendants, the Pseudo-Democrats, as a Christian party, is that the Pseudo-Democrats don't want us to. In fact, their theocratic ideology, progressive idealism, is the leading modern descendant of the most powerful American Christian tradition, the "mainline" Protestants, who infested New England in the early 1600 and for some damned reason have never left.

These bastards are the Roundheads, the Puritans, whatever you want to call them, and after their defeat of the last Cavaliers (to be clear, the Slave Power was no picnic either), they have reigned unchallenged in North America. And no less outside it - indeed, more. The beliefs held at Harvard, not those at West Point and certainly not at VMI, are the complacent belches of today's global transnational governing class.

If they feel some occasional Biblical pang, they sometimes call themselves "Unitarians." But they have long since discarded the encumbrance of the supernatural, and these days their opinions are simply the truth - "science" or "reason," usually. I am particularly fond of the phrase "reality-based community," which is so stupid it's almost ironic.

How repugnant can such smugness get? This is our ruling class. This is our governing party. These are the beliefs of celebrities, kings, professors, novelists, poets, painters, and musicians. All the best people lick the Democrats' prodigious and lordly asses, bowing and scraping to their ridiculous banalities - whether the planetwide spoils system they call "environmentalism," or the combination of saccharine pity with rule-by-corrupt-thug that is "postcolonialism." I'm sorry, but I simply refuse to believe that it is in any way difficult for anyone with a brain to tell which beliefs are, in the world of 2007, at least in all our cozy nests of real status and real power, fashionable - and which aren't.

The Central Fiction of the Democrats is that none of this is true. Actually, we are still living in the British Empire, under the rule of Queen-Empress Victoria, but of course a hundred years later. Prancing lords and ladies, cardinals and their catamites, sneer at us as they slide past in their Porsches, crushing the poor under their great alloy wheels. In some obscure way the British ruling class has managed to merge with the Nazis, perhaps through one of the Mitford girls, and they have been joined by the Jews, who have actually become Nazis themselves and are also engaging in their usual criminal behavior of running global financial corporations and making terrible, terrible films that appeal to the lower-classes. And so on and so forth.

One can become infinitely lost in the infinitely weird details of this bizarre mirage, which is embraced deeply and lovingly, with absolute and uncritical credulity, by basically the same people who believed in Prohibition a hundred years ago, or Transubstantiation five. (Or was that Consubstantiation? Maybe it was Consubstantiation.)

So. What Yglesias is trying to tell us in his little snarky microthought is that he speaks for the Resistance. Specifically, for the BDH faction, a plucky bunch of underdogs who struggle to defend their last few planets against the overwhelming star destroyers of the OV Empire.

This is, as I've said, a single gigantic lie. In fact, Yglesias makes a hissing noise when he breathes. He finds your lack of faith disturbing. When he gets angry, little lightning bolts shoot out of his hands, and his clone armies are hatching as we speak.

Of course, I could be an evil plotter as well. Perhaps I, too, have my clone armies. So why not take a while to make up your mind? Don't stop reading Yglesias, but read UR too. Soon I will send out orange scarfs for to wear when we make revolution.

34 Comments:

"Jews, who have actually become Nazis themselves and are also engaging in their usual criminal behavior of running global financial corporations and making terrible, terrible films that appeal to the lower-classes."

It was transubstantation until 5 centuries ago. Luther was responsible for con-. (Well, it was all con but you get my drift.)

This statement is clearly nonsense: "Comedy, to be funny, usually requires the skewering of the powerful in some sense." Maybe you could open that one up a little... another post? How does that thought represent the Democrat ethos? (Remember my comments on Borat?)

"If anyone rejects this independence, you have to wonder why."

Maybe they want more readers? (Don't we all?) Somehow, being beholden to the screed of Church or politicians wasn't a problem for the great artists of ages past. Why?

The academic left and people like Yglesias, who got all their ideas from it when they were university students, and haven't had one since, are obsessed with the old haute bourgeoisie's supposed status as the "ruling class." I'm sure that some of them really believe that somewhere, plutocrats whose generous embonpoints are swathed in waistcoats embroidered with dollar signs, look out the bay windows of their private clubs as they smoke their cigars and contemplate the ragged wretches standing in bread lines on the street below.

I recall reading a book by a California college professor named Domhoff in which he proposed that favored tool of the academic sociologist, a scoring system, to determine whether a person belonged to the "ruling class." Identifying factors were whether the person held one or more corporate directorships; belonged to one or more of a list of private clubs; had an entry in the Social Register; etc. As it happened, I read this book not long after being elected to a couple of boards; I had been a member of one of the listed clubs, and indeed had an entry in the Social Register. At first I wanted to write to Prof. Domhoff wondering when I could be taught the secret handshake and begin to exert sinister influence. Then it occurred to me that the good professor would probably not see the humor in such an enquiry.

The old institutions of what you call the optimate caste still exist, but anyone who thinks they represent any sort of social power is living in a fantasy world. In the past thirty years, three of the private clubs in my Midwestern city have closed for lack of interest. The newly rich don't understand, much less appreciate such things. They will join a country club if they play golf, but what is the use for a grand old building downtown where all one can do is get dinner with a bit better wine at a bit lower price and in a bit quieter surrounding than at some fashionable restaurant? It has been years since anyone here bothered with anything like the presentation of debutantes. The newspapers haven't run "society pages" since I was a child.

In larger cities, some of these social phenomena may still be observed. It struck me some years ago when attending a reception of one of the lineage societies at the "G&B" that the residual WASP population in New York is just another ethnic minority, and to the average New Yorker its characteristics must seem no less peculiar than those of some obscure sect from the Balkans or south Asia. It's telling that the New York Genealogical & Biographical Society just sold its building on 58th Street - to a synagogue! Sic transit gloria mundi.

Even so, the left will go on promoting the idea of a sinister, moneyed, reactionary, WASP elite as long as it serves their need for self-validation.

"When all its work is done, the lie shall rot;The truth is great, and shall prevail,When none cares whether it prevail or not."

Well, I could try to start another debate, but I am not sure there's a point. I think we are running into the problem of the indeterminacy of translation here.

However, have I finally figured whom you remind me of.

Are you familiar with the fairy tale 'Snow Queen' by Hans Christian Andersen? There is a fascinating scene near the end, when Gerda finally finds her heart-frozen brother, Kay, in the ice palace of the Snow Queen. I will quote you the relevant passage.

Little Kay was quite blue with cold, indeed almost black, but he did not feel it; for the Snow Queen had kissed away the icy shiverings, and his heart was already a lump of ice. He dragged some sharp, flat pieces of ice to and fro, and placed them together in all kinds of positions, as if he wished to make something out of them; just as we try to form various figures with little tablets of wood which we call “a Chinese puzzle.” Kay’s fingers were very artistic; it was the icy game of reason at which he played, and in his eyes the figures were very remarkable, and of the highest importance; this opinion was owing to the piece of glass still sticking in his eye. He composed many complete figures, forming different words, but there was one word he never could manage to form, although he wished it very much. It was the word “Eternity.” The Snow Queen had said to him, “When you can find out this, you shall be your own master, and I will give you the whole world and a new pair of skates.” But he could not accomplish it.

That is you, dude. Playing with shards of ice. The problem is not with you using reason, but with letting it become a toy, a Worm Ouroborous eating its own tail, self-contained, forever going nowhere in a madcap vicious cycle.

I have been delinquent in responding to these comments, but I really have nothing much to add to any of them (except victor, who I will get to in a moment!)

conrad - interesting link. Gerard Jones says much the same thing as Yglesias, at greater length and with more intelligence. It's funny how right so many are about the disease, and how wrong (in my opinion) about its cause. Iatrogenicity in a nutshell.

Being beholden to the Church or the Medicis or whoever was certainly a problem for the great artists of the past. But they managed to work around it, probably mainly because they could see that it was indeed a problem. Caravaggio was under no illusions that the Pope was hip.

michael - the reason I have this blog is that I spent too much time leaving comments on other peoples' blogs, and when many people you respect give you the same advice it is time to take it. While I am not at all unhappy to have this caliber of discussion in my little smoke-filled room, I'm not under the illusion that it is sustainable.

I am particularly grateful for this comment of yours because it confirms a suspicion of mine that is derived from inference, not personal experience. I have some distant links to the optimate caste but they are very, very tenuous.

A very eloquent Burkean statement. I have no response to this criticism, which I believe is substantially correct.

I told Nick Szabo that when you scratch a libertarian, you find a socialist. Likewise, when you scratch a liberal, you find a conservative. I have no moral objection to any of these perspectives - I would like to think that libertarians, socialists, liberals and conservatives alike could read this blog. This is probably wishful thinking, but at least I try.

Reason is indeed a dangerous toy. I play with it for two reasons.

One, history strikes me as a lot easier to make sense of than metacircular higher-order types. It stretches my brain and gives it a rest.

Two, I am much more of a Burkean than I seem. The past is another country - not just one country, but a lot of them. You can think of my approach to these countries as a kind of historical multiculturalism.

For example, it's a great pity that no one yet has succeeded in getting the 1911 Britannica on line in a clean, searchable edition. I try to give as much respect to the perspective of 1911 as that of 2007 - which, if any consistency exists, if the pieces of ice are to fit together (and why shouldn't they?), often means being pretty dismissive toward both.

So while I don't pretend that I am the only one who can play with these toys, I think - as someone who disagrees with me - you'd rather have me doing it than a lot of others. My results are, I admit, unusual. But I constantly try to allow for the possibility that they are wrong, and I absolutely refuse to condemn or vilify those who disagree with me. The Democrats may be the "party of lies," but they believe those lies. Their hearts are, by and large, like those of most parties in most times, pure.

What annoys me - and what possibly made this post a little more intemperate than it should have been - is that, being the party of power, they don't seem to feel obliged to extend this credit to their opponents. While this view is, again, sincere, in practice it amounts to rudeness, and rudeness will always get my goat a little.

But I appreciate your willingness to defend the status quo, because someone (genuinely) needs to, and it is always less fun to defend than to attack.

I do greatly admire the Burkean methodological stance. However, I consider myself a liberal because I think that prudence must be tempered by occasional adventuresomeness. As a computer scientist myself, I well know that a good balance between exploration and exploitation is sine qua non in learning systems. As someone said, everything in moderation, even moderation.

That being said, I do very much enjoy following your path of thought; it's just that there is a bit of a bait-n-switch involved here, I think -- ostensibly you are writing about humans and human societies, but in reality you are dealing with an abstract universe of your own construction, tethered to reality by the flimsiest of webbings; and the more you write, the more obvious this disconnect becomes.

This is why I wrote about the problem of indeterminacy of translation. We seem to be speaking the same language, but our underlying assumptions and relations are at odds. I can follow your semantic game right along, but when the time comes to map it back onto reality, it all comes crashing down. In the end, it's just a particularly complex relative of Bingo, or talmudic scholarship if you prefer.

Please don't blame us for not extending you the benefit of the doubt. I would like to, and I do that for conservatives as much as possible (some of them are just too fucking dumb to treat seriously, though the same can be said of some liberals), but I wouldn't know how to even begin to do that with you. We speak too different a language.

As a brahmin in your classification, I am more interested in solving real problems: geopolitical, economic, etc. In your view, I would be defending the status quo no matter how much I disagree with it, because in the end, I believe the Big Lie of the implicit power structures and social strictures. I accept that. I look at the economic interaction in the standard model, and I see how free markets can fail and require institutional correction, such as the 1996 Telecommunications act which created an entire free market where natural monopolies used to reign, a problem (a market failure mode known as 'network effect') which the mere fact of perfect sovereignty couldn't possibly solve. I look at democracy and see not a system which has a fundamentally broken-by-design decision-making process, but a system which works and can be made to work better (Condorcet voting!) I look at property and I see neither an evil nor a formalized way to settle all disputes, but as a medium within which human conflicts take place. I am a pragmatist, both in colloquial and philosophical senses, and I find it rather ironic that you accuse us of being Idealists -- because my ultimate criterion for decision-making is 'what works'.

In the end, I prefer plowing the fields and building houses to playing with ice crystals, dude.

My problem with your pragmatism is that I think it's based on very deeply-rooted Idealistic assumptions which reflect the institutional dominance New England Christianity, coupled with Hegelian idealism, achieved over American intellectual institutions in the late 19th and early 20th centuries. That this strand of thinking was more successful in academic politics does not make it right.

In other words, it is very easy for people to claim to be pragmatic and rational. Al Gore, or at least someone using that name, wrote a book called "The Assault on Reason." Oriana Fallaci, or at least someone using that name, wrote a book called "The Force Of Reason." Clearly, one of the two is not, in fact, reasonable. I don't think I've provided enough information in this blog to say which it is.

The thing is: I am actually not inventing all this stuff out of whole cloth. As my latest post demonstrates, my ideas are not original at all. I am reworking them as if they were original, because I am not a Burkean and I believe I can argue well enough to make them stand on their own.

You see, the problem with all the "conservatives" of today is that they exist in order to be strawmen. As you mention, it is very hard to even find someone smart enough to argue with these days.

That's why you have to look to the past. Forget today's conservatives. They are simply not worth arguing with. They are the product of an adaptive environment which systematically rewards stupidity.

If I were you, the books I'd read are _Theory of Money and Credit_ by Ludwig von Mises (1912), the Burgess posted above (1915), _As We Go Marching_ by John T. Flynn (1944), and _Liberty or Equality_ by Erik von Kuehnelt-Leddihn (1952). All of these are available online in decent readable copies. They may not change your mind, but they will certainly challenge it. I don't believe you'll find much resemblance between them and the products of the present-day "conservative" industry.

"Being beholden to the Church or the Medicis or whoever was certainly a problem for the great artists of the past. But they managed to work around it, probably mainly because they could see that it was indeed a problem."

I don't think this is good enough. We are quite happy to see political apologism for, even pandering to, the tastes and beliefs of State and Church, in say the paintings of Giotto, or the writing of Spenser and Sidney, AND accept these as great art. Their very conscious beholdenness to authority-structures, sometimes to the extent of being propaganda, does not disqualify them from the canon. (Any more than the supposed 'transgressiveness' of historical works, so lovingly unearthed by the modern academy, makes those works Great Art.)

I will probably not read "Money and Credit" any time soon, as my reading list right now is filled for a while (Quine and Dretske are kinda slow going). I would, however, be rather interested in knowing how Mises addresses the questions of market failures, specifically of externalities and increasing return to scale. The latter is what creates natural monopolies, resulting in gross economic inefficiency, while the former simply causes gross inefficiencies directly. Does Mises have a libertarian answer to those problem?

I do see why you would be attracted to the Austrian school of economics, though. They also play a-priori semantic games in profound disconnect from the empirical reality. If I must pick a market-fundamentalist school of economics to take seriously, I will go with the Chicagoans, I think.

The Mises crowd would likely respond to some of Victor's points with The Myth of Natural Monopoly. More important than either the Austrian or Chicago school, in my opinion, is the Public Choice school. I find Austrian-critic Bryan Caplan particularly insightful and eagerly anticipate reading his book "The Myth of the Rational Voter".

The fact that logic is deprecated as "semantic games," whereas cooked statistics become "empirical reality," is a big part of your problem.

Actually, Mises' book has nothing to do with the problem of monopoly (for that I recommend Rothbard's _Man, Economy and State). Rather, it is the first coherent explanation of how a financial system should work.

If Mises is right, he delegitimates the New Deal, whose Dolchstoss is the Great Depression - an event that, if Mises is right, was clearly the result of financial crimes on the part of the Progressives. And it follows ineluctably, that is according to logic, in which of course you don't believe (it is so "a priori" that two plus two equals four - where are the experiments) - that we live in a criminal regime.

If you don't have time for Mises, don't worry - I will cover all of this myself. In due time, natch.

While I am very admiring of the Public Choice school, one of the reasons I started this blog was to have a place to give that specific piece of Caplan's a really, really hefty, deep and nasty, rhino-sized reaming.

Because I am not at all admiring of the "George Mason School." Actually I think they are a bunch of shills. And I find their popularity very depressing. But the reasons for this are complicated, they depend on me being right about some very detailed arguments, and I certainly would not ask anyone to accept this mere ex-cathedra assertion.

In the meantime you might want to look at the responses by such as Walter Block - if you google Block and Caplan you should find the exchange, in the QJAE I think.

Also, I don't completely trust DiLorenzo - his heart may be in the right place, but he is a polemicist.

And there are all kinds of natural monopolies. A piece of land is a natural monopoly - only one person can own it.

The correct answer is simply that the monopoly rents of a natural monopoly will be reflected in its capital cost. There is no reason that a natural monopoly should be inefficient in any way at all. If it is most efficient to run as a system of competing firms, the monopolist can (or at least should be able to) set up such a system, charging all of them rent and passing on the revenue to its owner or owners.

Nick Szabo is right on this one - what really matters is the structure of jurisdictions.

The reason people are exercised over this issue is that what they really worry about is cases in which the monopolist gets the monopoly for less than it's worth, ie, gets a deal. A deal tends to be a steal - as it was, eg, for the railroad monopolies of the Union era - and a steal is a steal. But anything can be stolen.

DiLorenzo is certainly right that many things that appear to be natural monopolies are actually (evil) artificial monopolies. But this does not answer the underlying theoretical question which victor asked.

Spenser and Sidney may have been shills, but they probably knew it, and they certainly had to compete with people who weren't.

The problem today is that the people who think they are the most daring are in fact the most obsequious. This is brilliant and new. Nothing like it has been seen before, that I know of, and it works incredibly well.

The artists of today produce kitsch because they're rebelling against a fictitious power structure by supporting a real one. Kitsch is an inevitable quality of official art (see under: Arno Breker), and it indeed is what we get.

The whole system has to go. No trace of it can remain. People will have to actually be embarrassed to have been associated with the Polygon. They'll make up fictitious resumes to avoid having to admit that they once worked for the New York Times.

Also, increasing return of scale is a Progressive-era myth. Anyone who's worked in a big corporation knows it's quite the other way around.

Well, obviously, usually the returns to scale drop off soon enough. The whole point of this question is that there are domains where the very nature of the beast entails such a situation that effective competition is impossible due to increasing returns to scale.

The classic example is telephony (another classic example is the last-mile utilities, but I don't like it for illustrative purposes because I am not aware of a good solution to that problem). Naturally, different telephone networks don't have to be compatible, and in fact wouldn't be. Unlike cars or shirts, though, the value of each telephone directly depends on how many other phones it's connected to -- i.e. a phone in a network of a hundred is much less valuable than a phone in a network of ten million. This is a variation of increasing returns to scale known as 'network effect', where, rather that the marginal cost dropping, the marginal value increases.

In a domain subject to the network effect failure mode, competition is effectively impossible -- e.g. a really crappy service from AT&T is still better than a super-slick service from Joe Upstart, because a phone network is only as good as the people you can call using it.

No, don't bother bringing up AT&T's legal monopoly status. It was granted that status because its nature as a natural monopoly was recognized; and this way there were at least some checks on it, though rather terrible ones as we all know.

The real solution was implemented in 1996. The Telecommunications Act mandated that different providers sell access to their networks to their competitors, which legislation amounted to legally banning network effect (it's not often you get to ban what is essentially a law of nature, hehe). All of a sudden -- voila! -- real competition became possible; but it was only enabled by carefully considered legislation.

I am somewhat familiar with the Austrian argument that natural monopolies don't exist (that is, either don't exist or aren't abusive,inefficient monstrosities), and frankly, it's crap IMO. A natural monopoly is a case of a suboptimal equilibrium, well known in game theory, evolutionary biology, etc. Natural monopolies aren't nearly as common as most liberals believe (neither Standard Oil nor Carnegie Steel, for example, were actual natural monopolies), but they do exist -- and when they exist, they result is gross inefficiency and waste unless the problem is solved in some manner.

Now mind you, I am not a big fan of regulation; but when it's necessary, I much prefer regulation like the Telecomm act of 1996, which through judicious and intelligent application of law does exactly enough to permit the free market to function efficiently. I think the Telecomm industry is an indisputable example of how government legislation and judicious regulation can actually make the market more free and more efficient.

So, now that I have laid out an example of a natural monopoly, can you give a brief explanation of how such natural monopoly would fail to exist in Fnarg, or how it could be handled in a way consistent with your general approach?

One of the problems the Austrians often encounter is that, because of their libertarian heritage, they don't want to acknowledge the legitimacy of government institutions.

Obviously, as a formalist, I disagree with this. I see government as a very natural form of property. I just believe it is a business and should be run like one.

This means I have an easier time answering your questions than Mr. DiLorenzo might, although my answers might not make me popular over at mises.org. But who cares? Why scoff at DC, only to kneel and pray in the direction of Alabama?

My answer is: yes. It seems quite natural and obvious that a city should run its own electricity, cable TV, road maintenance, wireless Internet, etc.

Because I think of a city as a natural business, and if I were running such a business I would either insource or use a single prime contractor for my cellular service, just as for, say, my police service.

Probably in practice I would contract it. It is hard to manage a collection of unrelated tasks through a single personnel system. Ideally on a national level there would be a variety of contractors competing for the business, and if I as mayor-CEO decided that my current supplier sucked I would switch. I would certainly work very hard to avoid any kind of vendor lock-in.

In your larger example of a network effect, perhaps at one point it was true that telephone service was a US-wide natural monopoly. If you think of the US as Fnargland, there is no problem with this at all.

From Fnargland's perspective, it should decentralize the provision of any service - whether cities or telephone service - at whatever point at which it is more efficient to have multiple competing providers. Presumably there is some tradeoff point somewhere between pointless duplication of effort and administrative monstrosity. Wherever this line is, Fnargland draws it there. So there is no suboptimality. Any efficiency loss is equivalent to lost tax revenue, which should be going to the shareholders.

I am not a Bell-head and I think SS7 should be taken out and shot, possibly with some mild community service or at least fines for the people who created it. I don't think that in real life in 2007, networking should be managed on a national basis. But I see no reason to believe that this was never the case, and you will find nothing in Mises (certainly not in Theory of Money and Credit!) telling you it shouldn't be.

So I hope you see there is a method to all this madness. Except that it provides its own security, I do not fundamentally think the State is any different from any other class of institution. My model is actually simpler than the usual libertarian view, which no doubt you consider oversimplified. And, as we've seen, it answers your questions better.

Now, that said, markets can do some amazing things. I was shocked to learn recently that the city where I live, San Francisco, once had six competing cable-car companies! It is hard for me to imagine how this was even possible.

But in a private city, frankly, I find it hard to imagine this. I think it is a case of the market making up for democratic inefficiency.

Because basically, in my opinion, libertarians make a lot of errors because they are part of the wrong branch of the Anglo-Saxon tradition - the Cromwellian one. They have cast off most of the myths of the so-called Enlightenment, but they can't quite bring themselves to admit that the problem with the State is not that it's wrong for property to exist on such a scale, but that democracy doesn't work on any scale.

Perhaps you're familiar with the phrase "socialism with a human face." I think libertarians are essentially calling for democracy with a human face.

Not that I favor restoring the Romanov or Habsburg or Bourbon or Stuart pretenders to the thrones of Europe. It's over - they lost.

But I really don't know how it could be clearer that the violent destruction of the old regime was an unconditional disaster, with very few pros to go with its cons.

Demystifying the current corporate governments, and converting them to an efficient shareholder-oriented management structure, strikes me as a very sensible and practical response to this unpleasant realization.

I'm afraid my exposure to art criticism is really, really insufficient, and I mainly think of Greenberg as the guy who played him in the Pollock movie. One can't actually be a jack of every trade. But obviously - great minds think alike.

I loved the Breker interview - such drama! This book has a lot of good stuff on Nazi art.

WWII - really, the second European civil war - broke Western culture in half. Fortunately, the division was not even and the broader and better half won. But anyone who assumes that nothing good was lost when the Third Reich was smashed has an awfully Manichaean worldview.

Breker and Brecht, for example, are an interesting pair. Both probably about as skilled at their respective forms. There is nothing intrinsically Nazi about the ability to carve tightly sculpted male calf muscles. It's probably really goddamn hard - no subtle homoerotic pun intended. There is also nothing intrinsically Communist about the ability to write dialogue, which I know for a fact is really goddamn hard. Small wonder neither had much room in their skulls for anything else but idealist nonsense.

Feel free to respond to specific errors in "Myth of Natural Monopoly", but it clearly points out as a matter of history that during the nineteenth century telephones were NOT a natural monopoly: [page 47/5]competition was common and especially persist-ent in the telephone industry . . . Baltimore, Chicago, Cleveland,Columbus, Detroit, Kansas City, Minneapolis, Philadelphia, Pitts-burgh, and St. Louis, among the larger cities, had at least twotelephone services in 1905*.

[...][page 56/14]Once AT&T's initial patents expired in 1893, dozens of competitorssprung up. "By the end of 1894 over 80 new independent competitors hadalready grabbed 5 percent of total market share . . . after the turn of thecentury, over 3,000 competitors existed.** In some states there were over200 telephone companies operating simultaneously. By 1907, AT&T'scompetitors had captured 51 percent of the telephone market and prices were being driven sharply down by the competition. Moreover, therewas no evidence of economies of scale, and entry barriers were obvi-ously almost nonexistent, contrary to the standard account of the the-ory of natural monopoly as applied to the telephone industry***

It seems clear that competition DID exist, but was later prohibited through legislation. You can argue that there OUGHT not to have been competition, but the theory of "natural monopoly" is that some industries will simply become monopolies without government intervention, and are then simply "recognized", as Victor put it, rather than being made monopolies by the government.

Mencius, I'm surprised at your antipathy toward Caplan, since much of what you say about democracy seems similar to his public choice views. I look forward to seeing where you disagree. It should be noted that Caplan had a good response to Tyler Cowen's assertion that businesses will either be too uncooperative to make their services compatible or cooperative enough to form a cartel with (like Dilorenzo) historical examples in Networks, Anarcho-Capitalism and the Paradox of Cooperation. I disagree with his anarchism because, like Randall Holcombe, historical evidence makes it apparent to me that the state is inevitable.

My problem with DiLorenzo's argument is not in the details. I am quite unsurprised to hear that Ma Bell, like most monopolies, achieved its status through decidedly unnatural means. For one thing, since I don't believe in patents, I think of every patent monopoly as unnatural.

But I conceded Victor's point because the question was (or at least seem to me) one of praxeology, not history.

The references you point to strike me as convincing. I am inclined to be convinced. I am sure, however, that if I was inclined to be unconvinced, some statist historian has facts and figures to unconvince me. Ultimately I don't think all this inductive evidence is a good way to approach a problem which I view as fundamentally deductive.

My point was simply that if you conceive a country, for example a city-state, as a business, there are certain services it makes sense to outsource or sole-source. In the world we live in, in which (unfortunately in my opinion) countries are not run as businesses, these correspond to natural monopolies.

Because government, due to its screwed-up management structure, runs things so badly, it often makes sense to separate these services from government, even when an efficient government would insource them. Do I think San Francisco, the actual San Francisco we live in, would do a good job of running a cell-phone network? I don't. But this does not change my opinion that an entrepreneurial city-state would insource this function.

So my answer is that, perhaps, AT&T is not a good example of a natural monopoly. But I don't think the question needs examples. I regard this prejudice as part of the scientistic revolt against reason.

This perhaps plays a little bit into my views on Caplan. Caplan wants to be a social scientist, not a philosopher. And I don't believe in social science, because I think it relies way too much on uncontrolled experiments.

See for example Caplan's new book, or at least the summary posted at Cato. He criticizes democracy. So do I. But I attack it with the methods of Aristotle and Mises, whereas he attacks with the methods of Brandeis and Dewey.

I see the attraction of using an essentially Progressive methodology to try and question some Progressive dogmas. But the result is just to legitimate the scientistic methods that got us here in the first place, and that I think are the fundamental problem. Fix the dog, not the tail.

And what is Caplan's result? If you read the summary he has up at Cato, the solution is - big surprise - more democracy. This is just as in his piece on Austrian economics, where he admits that the mathematical style in economics is essentially fruitless, and then recommends that we continue using it because it's the status quo.

Basically, I dislike Caplan because he reminds me of the late Communist reformers - again, "socialism with a human face." Caplan is part of the system. He wants to repair it. I want to reboot it. Our goals therefore conflict.

For example, I believe it's a basic conflict of interest for anyone who studies politics or economics to accept any payment, direct or indirect, from the State. Caplan obviously disagrees. That is his right. But since I hold this opinion, which is admittedly unusual, it would be inconsistent of me not to regard him as a shill.

This is aside from various technical disagreements - for example, if Caplan has any opinion on fractional-reserve banking, I am certainly not aware of it. And why would he? It is not at all hard to imagine him at the Fed one day. His colleague Randy Kroszner is already there.

As Hunter S. Thompson put it, you can't wallow with the eagles at night and fly with the pigs in the morning. Caplan is on one side and I'm on another. That he is a bit of a "reformer" does not particularly endear him to me.

BTW, as for DiLorenzo, I think it's a good exercise to read one of his Lincoln books and then read Rogers Hummel's history, Emancipating Slaves, Enslaving Free Men. Hummel's is simply the best book I've ever read on the Civil War, and I've read a few. It is a remarkable work of both history and historiography. While I am certainly very grateful that the world contains neo-Confederate historians such as DiLorenzo, Thomas Woods, and of course the great Clyde Wilson, they tend to pick and choose their facts to make their point. Hummel does not, and that's what makes his version of libertarian revisionist history so much more effective - for me anyhow.

I'll have to tussle with you over logic/empiricism later, but I have to note that though Caplan takes money from the state, so have many Austrians (including anarchists). Mises did in Austria, Rothbard and Hoppe did so in America (and in the same university). Rothbard attempts to justify that here: http://www.lewrockwell.com/rothbard/rothbard63.html

I am not sure if I accept Rothbard's argument, but I have to admit that I do enjoy reading the output of many state-supported economists even though I don't think the government should be in the business of education.

Since I don't consider the state illegitimate, my ethical view of the economist who works for the state is more along the lines of how I see a tobacco health researcher working for Philip Morris. The opportunities for intellectual corruption are just too great.

Of course in Rothbard's time there was really no way around some involvement with the system. Both Rothbard and Mises experiences enormous academic difficulties as a result of their commitment to intellectual independence. Most of their colleagues succumbed.

I have a hard time imagining how libertarianism and Austrian economics even existed before the Web. But now that publishing is free and does not require any interaction with the Polygon or its minions, avoiding the official academic system is all the more an obligation, because there is no longer a plausible excuse for being involved with it.

I suppose the place I have the deepest reservations with both the libertarians and yourself is environmental protection. I can't tell which environmental policies are part of a "planetwide spoils system", and which you may condone. Do you believe in any sort of environmental protection? Does ozone depletion represent a problem in need of a vigorous solution? (I haven't figured out the libertarian position either, so I call these "reservations" rather than "disagreements".)